In various ways, some recent governments’ decisions are contributing to shaping the future of the semiconductor industry. On the one hand, opposition from regulatory authorities around the world is forcing Nvidia to give up the acquisition of Arm; additionally – after the recent passing of the U.S. CHIPS Act – also the European Union is planning public financial support to new local fabs. The big picture includes Intel – also in the news this week for its foundry initiatives – that is likely set to benefit from public support for its future fabs.
Nvidia gives up Arm acquisition; Arm to go public
On February 7 Nvidia and SoftBank Group jointly announced the termination of the transaction whereby Nvidia would acquire Arm from SoftBank. As stated in a press release, the parties agreed to terminate the attempted deal because of “significant regulatory challenges preventing the consummation of the transaction”. In the same announcement, SoftBank also stated that Arm will now start preparations for a public offering within the fiscal year ending March 31.
Some press and analysts’ comments are focusing on Arm’s ability to self-fund its growth through the stock market. EETimes recalls that – in a last attempt to rescue the deal – Arm released a document in January indicating it would face significant hurdles to growth as a standalone company if the acquisition fell through. Patrick Moorhead on Forbes, however, notes that for financial year ending March 31, 2022, Arm is forecasted to generate a record $2.5B revenue and $900M in adjusted EBITDA. According to Moorhead, this means that “Arm is actually very profitable” and this somewhat surprising revelation sheds new light on the IPO option.
